Correlation Between Ryder System and Canadian Pacific

Can any of the company-specific risk be diversified away by investing in both Ryder System and Canadian Pacific at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ryder System and Canadian Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ryder System and Canadian Pacific Railway, you can compare the effects of market volatilities on Ryder System and Canadian Pacific and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ryder System with a short position of Canadian Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ryder System and Canadian Pacific.

Diversification Opportunities for Ryder System and Canadian Pacific

0.14

Correlation Coefficient

Ryder System  Canadian Pacific

Average diversification

The 3 months correlation between Ryder and Canadian is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Ryder System and Canadian Pacific Railway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Pacific Railway and Ryder System is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ryder System are associated (or correlated) with Canadian Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Pacific Railway has no effect on the direction of Ryder System i.e., Ryder System and Canadian Pacific go up and down completely randomly.

Pair Corralation between Ryder System and Canadian Pacific

Taking into account the 90-day investment horizon Ryder System is expected to generate 1.51 times more return on investment than Canadian Pacific. However, Ryder System is 1.51 times more volatile than Canadian Pacific Railway. It trades about 0.17 of its potential returns per unit of risk. Canadian Pacific Railway is currently generating about -0.01 per unit of risk. If you would invest  14,241  in Ryder System on May 5, 2025 and sell it today you would earn a total of  3,136  from holding Ryder System or generate 22.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ryder System  vs.  Canadian Pacific Railway

Ryder System

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ryder System are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Ryder System reported solid returns over the last few months and may actually be approaching a breakup point.

Canadian Pacific Railway

Risk-Adjusted Performance

Very Weak

Over the last 90 days Canadian Pacific Railway has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Canadian Pacific is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Ryder System and Canadian Pacific

The main advantage of trading using opposite Ryder System and Canadian Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ryder System position performs unexpectedly, Canadian Pacific can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Canadian Pacific will offset losses from the drop in Canadian Pacific's long position.

The idea behind Ryder System and Canadian Pacific Railway pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.